Another Example of Spreadsheet Risk


We missed this until now, but a Radical Compliance fan passed along this item for all you internal accounting control enthusiasts: a water development business in Colorado that recently had to correct its financial statements because of sloppy spreadsheet controls. The company in question is Pure Cycle Corp. ($PYCO), which sells water and wastewater services…

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SEC Straps Leather Company on Control Failures

The Securities and Exchange Commission has charged a Texas leather goods company with failing to maintain an effective inventory accounting system, which ultimately led the firm to restate two years’ worth of financial results and send its CEO packing. It’s a cautionary tale for the rest of us about how a poor control environment can…

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The Second Act of SPACs Enforcement

Last week the Securities and Exchange Commission took its first enforcement action against a special purpose acquisition company (SPAC), in a case involving poor due diligence and misleading disclosures to investors. We should expect more such cases in the future, but there’s also another realm of compliance risk for SPACs that needs more attention.  The…

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A Difficult Picture for Anti-Fraud Today


The Association of Certified Fraud Examiners is holding its 2021 conference this week (virtually), and to that end the ACFE also just published its latest survey on anti-fraud budgets, resources, and challenges.  Suffice to say, anti-fraud and internal audit teams have had a busy year. More than half of all survey respondents said they’ve found…

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SPACs Draw Internal Control, Governance Concerns


The Securities & Exchange Commission is stepping up its warnings about special purpose acquisition companies, with a new statement today walking through the internal control and governance concerns that SPACs and the private businesses they acquire are obligated to meet.  SPACs, also known as blank-check companies, are all the rage on the capital markets these…

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Headaches on ICFR and Better Tech


My phone rang the other day, and on the line was my friend the tech vendor. He was calling to tell me about new whiz-bang software his firm is developing to identify internal control issues — and within a few minutes, we stumbled into a dilemma about effective internal controls that needs attention. Hear me…

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ICFR, Still Driving Companies Nuts


We have yet another report today depicting the tensions companies face when building internal control over financial reporting, including the enduring suspicion that many audit firms raise questions about internal controls simply to look good to the Public Company Accounting Oversight Board. The report, released Tuesday by Financial Executives International, interviewed 145 financial reporting executives…

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PCAOB Report on Pandemic Auditing


The PCAOB just published a mid-pandemic progress report on how audit firms are handling their work during coronavirus. Compliance and audit executives may want to give it a read for hints about how auditors are trying to inspect your internal controls and which risks are high priority. The report, Staff Observations and Reminders During the…

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Critical Audit Matters: Are CAMs a Snoozer?

internal audit

The Public Company Accounting Oversight Board just published three reports on the implementation of critical audit matters, all suggesting that the inclusion of “CAMs” in an audit report simply isn’t that big a deal.  The research, published with little fanfare last week, found no strong evidence that CAMs drive up audit fees or delay the…

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SEC Talks Covid Disclosures


Just in time for the end of second quarter, the Securities and Exchange Commission has published another dollop of guidance about financial disclosures companies should keep in mind as they navigate Covid-19.  The statement came Tuesday from chief accountant Sagar Teotia. It’s the latest in a series of pronouncements SEC officials have made since early…

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